On June 17, the Hang Seng Index lost 3.17% in a single session with a surge in volume which may indicate climactic selling. Since then it has attempted to rebound. Both short and medium-term indicators remain at oversold lows. However, they have yet to form positive divergences with the index.
The Straits Times Index lost 39 points week-on-week, ending the third week of January at 3,152. Since the breakout level was at 3,150, support should materialise soon. The problem for the STI is that is being buffetted by the Hong Kong and mainland China stock sell-off.
As at end-December, only around 32.97% of the Hang Seng Index comprised of traditional Hong Kong companies such as HSBC, which remains the largest component with a weightage of 8.61%. Other Hong Kong companies in the index include SHK Properties, Cheung Kong Holdings, Link REIT, Hang Seng Bank, CK Asset, and MTR Corp. In general the Hong Kong companies are banks, property-related and conglomerates. Alibaba, Tencent, China Construction Bank, Meituan and China Mobile rank among the top 10 stocks with the higheset weightage. Within the top 10, only HSBC, AIA and Hong Kong Exchange feature as Hong Kong stocks.
